Question

As manager Finance of Books and Beyond you are supposed to recommend the following: i) What should be the level of sale the new book- store must achieve to reach the break-even? ii) Incase due to the inflationary trend in the economy the Books and Beyond expects the material cost and utilities to increase by 10%. And the company feels that the other costs shall remain unchanged. What impact would these changes have on the new book-store? iii) Incase the Books and Beyond feels that there would be an increase in the fixed cost by Rs 2.50 lakh and the company also intends to generate a profit of Rs 4.50 lakh in a year, then how much sale should the new book-store have?

Answer 1

Answer:

As manager Finance of Books and Beyond you are supposed to recommend the following: i) What should be the level of sale the new book- store must achieve to reach the break-even? ii) Incase due to the inflationary trend in the economy the Books and Beyond expects the material cost and utilities to increase by 10%. And the company feels that the other costs shall remain unchanged. What impact would these changes have on the new book-store? iii) Incase the Books and Beyond feels that there would be an increase in the fixed cost by Rs 2.50 lakh and the company also intends to generate a profit of Rs 4.50 lakh in a year, then how much sale should the new book-store have?